The following is an excerpt from an article by Morgan Housel discussing our blindness to probability and its like of usefulness in the real world:

I valeted at a hotel in college. We parked 10,000 cars a month. And we banged one of them up every month, like clockwork.
Management found this atrocious. Every few weeks we’d be scolded for our recklessness.
But one accident in 10,000 parks is pretty good. If you drive twice a day, it’ll take you 14 years to park 10,000 times. One bent fender every 14 years is a driving record your insurance company won’t bat an eye at.
But try explaining that to your boss who had to file so many damage reports they got to know the insurance claims adjusters by name. You’ll get no sympathy. It’s so much easier to say, “You guys are clearly being reckless. Slow down or you’re fired.”
The same thing happens during bear markets. You can show people that the market historically crashes every five to seven years. But every five to seven years people say, “This is wrong, this sucks, this feels broken, my advisor screwed up.” Knowing the high odds of something happening loses its meaning when that thing happening hurts. Probability goes out the window.
Same in an investment portfolio. If you make 50 investments you will probably do OK on half, terrible on a quarter, and great on a quarter. That’s what success looks like. This is true in various degrees whether it’s blue-chip public stocks or venture capital. But even if you know that the majority of investments you make won’t be great, anyone looking to question your skills – sometimes it’s you questioning your own – will have plenty of examples to criticize. Odds that are in your favor but still hurt are hard to distinguish from odds that aren’t in your favor.

Read the full article by Morgan Housel here.

Follow Morgan Housel on Twitter here.

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